The SEPA project unifies the continent’s electronic fund transfer schemes. European payment schemes will successively replace all the previous national payment schemes. First, there was the SEPA credit transfer (CT) introduced in 2008. Now the European Payment Council (EPC), the decision-making and coordinating body of the European banking industry which is developing the SEPA scheme and framework, has set the deadlines for unifying the national direct debit (DD) payment schemes to one standard – the “SEPA Direct Debit” or “SDD”.

Growing together – growing pain?

The EPC has mandated a schedule for the migration to the new SDD standard. The migration plan has its next milestone on 1 February 2014. How firm is that date? Looking at how many market players are behind schedule in their preparations, some have started to wonder if the deadline will hold. However, you would be ill-advised to bet your business on such speculations and take them as a reason to lag in your efforts.

After the deadline for the payment processors, both domestic and intra-regional direct debit payments in the EU have to follow the SEPA standard. This means that it is mandatory to use IBAN and BIC instead of the account number and bank code as the bank account details to identify the accounts of payers and payees. But who knows their IBAN or even the bank’s identifier (BIC) by heart? So there is going to be some pain on the consumer side as well – which has led to IBAN’s highly unofficial byname of “IBAN the terrible”.

Unified data, formats and timelines

IBAN/BIC, creditor ID and mandate reference ID are the parameters to keep in mind. Some are not new, as IBAN and BIC have already been in use for the European credit transfers for years. Yet some are new, such as the creditor ID and the mandate reference ID. With the new direct debit scheme, the European Central Bank (ECB) has also mandated maximum bank processing times, so that the consumer can rely on when their money will reach the recipient. In addition, every merchant can define their own valuta delays. These are improvements, for sure, but not necessarily simplifications.

The consumer focus

Some say SEPA was designed to better serve the consumer, while others are a bit sceptical about the new scheme. It is just the same as with every change – some growing pains will have to be overcome in the transformation. However, one fact cannot be denied: with this pan-EU payment scheme, you can address about 500 million people and their funds with just one single payment scheme. This is an opportunity for all participants in Europe and even worldwide – everybody can benefit from one unified and defined standard called SEPA.

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